Agenda item

In accordance with Fund’s investment objectives in the 2019/20 Business Plan.

Witnesses:

Mamon Zaman - Senior Pensions Finance Specialist

Neil Mason - Strategic Finance Manager (Pensions)

Anthony Fletcher - Independent Advisor (MJ Hudson)

Andrew Stone - Border to Coast

Key points raised in the discussion:

1. The Chairman commented that although the Fund was working closely with the Border to Coast Pension Partnership (BCPP), the Fund had its own clear view of Responsible Investment. The Strategic Finance Manager (Pensions) echoed the importance of the Fund’s close relationship with BCPP as it was crucial to the Fund’s whole investment policy.
2. The Strategic Finance Manager (Pensions) explained that the BCPP’s Responsible Investment Policy 2020 and Corporate Governance and Voting Policy represented the joint agreement with the twelve partner funds. In addition to those documents, Surrey Pension Fund identified the need for a Committee sub-group on the Fund’s own approach towards Responsible Investment - as indicated in the third recommendation. The sub-group would clearly express the Fund’s core beliefs on Environmental, Social and Governance issues (ESG) and Members of the Committee had been invited to be a part of it.
3. The Chairman questioned how far the Fund would go on the Spectrum of Capital with the use of its capital to deliver Responsible Investment. In response, the Strategic Finance Manager (Pensions) commented that an independent Engagement Specialist to support the work of the sub-group and measure the Fund’s performance against the United Nations Sustainable Development Goals (SDGs) was being employed and the Fund were committed to ensuring it addressed Environmental, Social and Governance issues (ESG).
4. The Vice-Chairman expressed unease with the differing definitions of Responsible Investment within the Spectrum of Capital from ‘Traditional’ to ‘Philanthropic’ as it categorised the traditional category as being irresponsible. The other approach of mapping the Fund against the SDGs was useful but only a handful of SDGs could align with the Fund’s investment approach.
5. The Independent Advisor noted that the Pensions for Purpose Director would argue that a Pension Fund should not move beyond the fourth SDG as that would exceed the Fund’s fundamental fiduciary duty of ensuring sustainable financial returns not detrimental to its beneficiaries.
6. The representative from Border to Coast commented that policies on Responsible Investment were broad church but it was good practice to include ESG issues to ensure the management of risks and sustainable long term returns.

RESOLVED:

The Pension Fund Committee:

1. Noted the results of the ShareAction survey regarding the Fund’s approach to Responsible Investment and Climate change.
2. Approved the revised BCPP Responsible Investment (RI) Policy 2020 and Corporate Governance & Voting Guidelines 2020.
3. Approved for a Committee sub-group to be convened to develop the Fund’s RI Approach (and define RI). To include, but not limited to:

·         The Fund’s positioning of Responsible Investment in its Core Investment Beliefs

·         The Fund’s relationship with BCPP, more specifically BCPP’s RI approach to the Fund’s pooled assets

·         The Fund’s RI approach to existing legacy portfolios yet to be transitioned to BCPP

·         The Fund’s RI approach to its Indexed Funds currently held with Legal & General Investment Management (LGIM)

·         Reaching a recommendation on the position of The Fund on the Spectrum of Capital (Paragraph 16)

·         Exploring the analysis of scenario mapping The Fund’s portfolio in line with the United Nations’ (UN) Sustainable Development Goals (SDGs) (Paragraph 17), carried out by an independent provider

Actions/further information to be provided:

None.